Paying to Make It to the Top of the Charts

Feb. 16, 2006 — -- The ride to the top of the charts was an American dream come true for drummer Jake Slichter, of the Minneapolis band Semisonic. The band's song "Closing Time" became the No. 1 tune in the country in 1998.

"We had always been like the little unknown band with songs very few people knew," Slichter told ABC News' Brian Ross.

"I remember the first time we played 'Closing Time' when it was a No. 1 hit," Slichter said as he recalled a concert at RFK Stadium in Washington, D.C.

"The song sort of starts quietly, and you could feel this sort of peel of screams kind of go back through the crowd," he said. "When I crashed the cymbals on the downbeat of the chorus, you could just feel this incredible, like, tidal wave of energy and it's just like whoosh."

"We have been playing rock music our whole lives. That is that moment," Slichter said. "That is a rock star moment."

'A Chunk of Change'

But as the song started to spread across the airwaves of American radio, from Los Angeles to New York, the new rock star said he was in on one of the secrets of his band's success -- payola.

"We definitely benefited from payola," Slichter said. "There is no doubt about it."

Payola, what many authorities would call bribes, is money and gifts that record companies and middlemen give to radio stations to play songs.

"It cost something close to $700,000 to $800,000 to get 'Closing Time' on the air," said Slichter, "to keep it on the air long enough for people, for public taste to really grab on to it, yeah. A chunk of change."

Payola was a multimillion-dollar secret that was out in the open at last week's Grammy festivities in Los Angeles, where a number of recording artists on the red carpet said it was an unfortunate part of the industry.

When asked if he believed if payola still existed in the industry, veteran artist Tony Bennett said, "Absolutely. It costs a lot of money to make something famous."

Grammy nominee Fiona Apple told ABC News, "It's a business about money. People are trying to get what they want done, and they'll pay for it if they've got the money, sure." Apple added that she did not know if payola was responsible for getting any of her work on the airwaves.

Others were also not surprised that payola still existed.

"I think that's been going on a really, really long time," said Foo Fighters drummer Taylor Hawkins. "I think back in the '70s, they used to pay people with hookers and cocaine, and now they're just doing it with straight-up money -- so they can go out and buy their own hookers and cocaine."

E-mails Tell the Story

According to music industry documents, payments to radio stations in a variety of forms have helped launch some of the country's best-known hits and Grammy winners, including last year's Grammy winner for song of the year, "Daughters," by John Mayer, and last year's best new artist Grammy winner, Maroon 5.

While the songs became hugely popular, it took more than just popularity and talent to get them played on the radio. They benefited from what New York Attorney General Eliot Spitzer called payola.

"It is certainly the case that payola has been a part of the promotional structure for many of the artists who are out there," Spitzer told ABC News. He said the latest version of payola involved people at the highest corporate level of record labels and radio broadcasting companies.

Spitzer said that despite the sweeping use of iPods and the Internet to get music, it still all comes down to airtime. "Airtime drives sales, sales means revenue, and the way a song gains popularity is still to be heard over the air by the listening audience."

The practice of payola goes back to the beginning of rock 'n' roll in the 1950s when Chuck Berry's songs were linked to it.

"Historically, it had been cash, other contraband, favors of illicit sorts, that were given to deejays to get airtime for various labels, but the process and mechanisms of payola became more institutionalized over the decades," Spitzer explained. "[It's] slightly more sophisticated, slightly more corporate," he said, "but the essence of the scam is still the same.

And, he added, still illegal.

The key to Spitzer's investigation was internal record company e-mails that the attorney general said lay it out in black and white: who got paid what for which song, including songs by Jennifer Lopez. He said the e-mails revealed how Sony BMG bought airtime for J. Lo's "Get Right" last year. Each play is called a spin in the record business.

"Please be advised," the e-mail read, "that in this week's Jennifer Lopez Top 40 Spin increase of 236 we bought 63 spins at a cost of $3,600."

Each spin, each time it was played on certain stations, helped the song move up the Top 40 charts.

"If you can manipulate those so that a song appears on the listing, again, that triggers not only more airtime but more sales," Spitzer said.

According to one e-mail, to get more airplay for a Celine Dion song "Goodbyes," Sony's Epic Records cut deals with the CBS Radio division, known then as Infinity Radio.

Another e-mail explained that, in exchange for free trips to Las Vegas, 13 CBS radio stations "agreed to report 'Goodbyes,'" apparently meaning the stations reported the song to the Top 40 chart keepers.

"Never talk when you can nod. Never nod when you can wink. And never write an e-mail," Spitzer warned. "Because it's death. You're giving the prosecutors all the evidence we need."

Investigation Leads to Radio Gatekeepers

Spitzer's investigation has now led him to the radio industry and to radio program directors -- the gatekeepers of airtime -- like Dave Universal.

"Apparently, I'm the poster boy for payola, little old me," Universal quipped in an interview with ABC News.

Before he was fired in the wake of the Spitzer payola investigation, Universal decided which songs got on the air at Kiss-FM in Buffalo, N.Y., owned by Entercom, one of the biggest radio conglomerates.

When asked how much money record companies were willing to spend to play songs at Kiss-FM, Universal said, "I'd say I usually raised probably about a $100,000 a year."

"I did really well," Universal said. "I was Entercom's golden boy for a long time."

Universal disputes that what he did was payola and denies doing anything illegal. Yet internal record company e-mails obtained by Spitzer spell out how Universal would demand specific payments for specific songs.

For example, after his station added a song by the group Franz Ferdinand, one Sony music executive complained to another: "It cost us over $4,000 to get Franz on WKSE" -- Universal's station

And for adding additional songs by Good Charlotte and Gretchen Wilson the total increased to "almost $5,000 in two weeks for overnight airplay."

The executive complained, "We are now once again on Dave Universal's agenda, which we swore we would never do again."

Universal admitted he asked for money to play the Wilson song "Redneck Woman," but he said he only did that after he had decided to play it.

"Now I did go back and say I need a thousand, you know, what do you got on this record? Absolutely. I did that every single time," he said. "I would take whatever I thought I could get."

Universal insisted there is nothing wrong with that. "I'm reinvesting that on the product," he said. "It's not a bribe because it's money they're giving to help pay and promote their artists."

But isn't that payola? Universal thinks not.

"Not at all, because you're making these decisions after the fact," he said. "Every label had money out there. You played the records that were best for your radio station."

Universal insisted that his decisions about which songs to play were never made with money in mind. "No matter what, you made the decisions and then you went and tried to get as much money as you could."

Unfortunately for Universal, the attorney general didn't excuse his logic.

"So he's saying, 'I was guilty of extortion, not bribery,'" Spitzer said. "Interestingly, he acknowledges taking the money, which he shouldn't be doing. Now, the claim that I wasn't influenced, you know, it's like, historically, judges who say, 'Well, of course I took $5,000 from the plaintiff's lawyer, but I didn't let it influence my determination.'"

In any case, Dave Universal said he didn't get the money. Almost all of it went to the radio station or to Entercom's bottom line.

"It was good for Entercom," Universal said. "It was good for them, because I brought that money in. I was the guy doing the work for them, as much money as I could bring in, the better I looked. If I brought in two, three grand that week, I looked like a savior."

Spitzer said that is still illegal behavior. "I don't disagree with him that the benefits flowed in many different directions, but it was wrong and improper and illegal."

Dave Field, CEO of Entercom, declined to be interviewed by "Primetime." Spitzer said his team of investigators is now going through boxloads of subpoenaed documents from Entercom and the eight other biggest radio companies, including ABC, to see if they are involved in payola. Of the six companies that responded to "Primetime," all said they are cooperating and take the issue seriously.

"Based on the evidence we have seen, some of the radio conglomerates clearly are participating, and knowledge of this and orchestration of this came from the very top," said Spitzer. "The behavior has been unethical, improper, illegal and a sanction of some severity clearly should be imposed."

Two of the record companies, Sony BMG and Warner, have settled with Spitzer, acknowledging some employees were involved in practices that were "wrong and improper." They have agreed to observe a "new, higher standard in radio promotion."

But it may not end there. Spitzer's investigation has now caught the eye of the FCC. According to FCC Commissioner Jonathan Adelstein, the FCC now has a wide-ranging investigation under way.

"These are probably the most widespread and flagrant violations of FCC rules in the history of American broadcasting," Adelstein told ABC News. "We've never seen such a systematic abuse of what is the public trust here."

Adelstein said the FCC is looking into hundreds of radio stations, from large chains and conglomerates to small, individual stations, for potential violations.

If violations are found, the penalties can be quite serious and range from loss of license to potentially very large fines. More important, Adelstein added, some of the allegations are criminal acts that can be punishable by up to one year in jail. If any criminal acts are found to have occurred, the FCC will refer them to the Department of Justice.

"We really need to put a stop to this," said Adelstein. "The problem is that for new artists that are trying to get on the air, it's almost impossible if the only people who are taking up the airwaves are those who've been, basically, who have paid off somebody in order to get play."

Jake Slichter could not agree more.

"It just seems wrong," Slichter said. He said he thought that payola blocked good music artists from ever making it to the airwaves if they lack the cash to get their songs played.

"It's not sufficient, but it's necessary to get to the starting line," Slichter said. "To get a little number on your shirt and get into the race."